RESOLVED: After having tried most things suggested by various people in thread I was able to create a bootable external ssd that runs the OS and all applications etc.
Things that did NOT work: creating a clone of the internal "fusion drive" onto a external ssd and boot from it. I used Carbon Copy Cloner, SuperDuper and via the macOS Recovery system to "restore" the HD to an external ssd. All of these were unable to create a bootable macOS Monterey 12.6.5 copy. I tried many times with all programs and there was just no way. I can only guess that the fusion drive makes everything even more complicated than Apple has already done on non fusion drive machines.
I thought about splitting the fusion drive into a seperate ssd/hdd but I really wanted a bootable/working external ssd before trying anything radical. I also found that many online resources that tell you how to split the drive use terminal commands that are incorrect or do not work in Monterey. I'm not going to mention all the mistakes I noticed but I was not going throw in terminal commands when not completely trusting that they will do exactly what I want.
This is what DID work: I, not completely, followed
Fishrrman suggestion.
1: I Erased the external SSD "
APFS, GUID partition format" in Disk Utility.
2: I restarted the iMac,
Command (⌘)-R at start-up,
in macOS Recovery system (I used a wireless bluetooth mac keyboard/mouse without any problems).
3: I went into the the
OS Monterey installer that showed and installed it on the external ssd (this took a few hours).
4: I did a fresh install to be sure it worked and once I was able to run the OS from the ssd I used
Migration Assistant from the internal HD to the External SSD.
5: I made sure the Startup Disk was set to my external ssd and started the mac multiple times to make sure it boots correctly every time. (start-up is slightly slower that the internal boot but nothing to bad)
Again thanks to all that participated and thanks to
Fishrrman for giving the one solution that actually worked.
I'm still debating if at one point I should completely reformat the internal HDD and/or split the fusion but for now I'm keeping as until I am convinced that this works smoothly without problems.
The enclosure and ssd used: Qwiizlab M.2 NVMe and SATA External Enclosure (USB-C 10Gbps, SSD Rugged IP66 Dust and Water Resistant) with a Leven JPS600 2TB (PCIe 3D NAND NVMe Gen3x4 PCIe M.2 2280 SSD with Heat Sink)
Enclosure and ssd +/- $105.- on Amazon